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Tech & Sourcing @ Morgan Lewis

TECHNOLOGY, OUTSOURCING, AND COMMERCIAL TRANSACTIONS
NEWS FOR LAWYERS AND SOURCING PROFESSIONALS

When responding to requests for proposals (RFPs), vendors should be conscious that they might be disclosing highly confidential or commercially sensitive material to the potential customer, with no guarantee of securing the proposed contract. Such information could, without any restrictions, be used by the potential customer to assist the vendor’s competitors or to develop solutions in-house.

In light of this, prudent vendors should carefully consider what legal protections they include in their RFP responses alongside operational and commercial details. We have set out some key considerations below.

Confidentiality

A vendor should look to protect all ideas and other confidential information set out in the RFP response from falling into the wrong hands: in particular, competitors. The vendor will also want to stop any information provided from being used for purposes other than evaluating the RFP response.

The vendor should make it clear that the RFP response and all information provided within are considered the confidential and proprietary information of the vendor. This can be achieved by including “Confidential” in the response’s footer so that it appears on all pages.

Consider signing a separate confidentiality or nondisclosure agreement (NDA), or using an NDA already in place between the parties. Failing this, ensure that there is confidentiality wording in the RFP response document.

If a new NDA is signed, consider whether its scope is broad enough to cover all information exchanged between the parties for a certain period, or whether it is specific to the RFP in question.

If the parties have an NDA in place, check if it covers information exchanged in relation to the RFP and that it includes all necessary protections. If there is an NDA in place but confidentiality provisions are also included in the RFP response, then consider conflict wording to ensure that the correct wording takes precedence in the case of any conflict of provisions.

Vendors should also consider any confidentiality provisions imposed on them in RFPs. Are these provisions acceptable to the vendor or particularly onerous?

Intellectual Property

The RFP response document is likely to contain a number of the vendor’s ideas and other valuable intellectual property. The vendor should protect its intellectual property in any RFP response as much as possible. Include some simple catch-all copyright wording in the footer of the document so that it appears on all pages; for example: “Copyright © [Company] [Year]. All rights reserved.”

More detailed intellectual property wording should then be included in the main body to reserve the vendor’s rights to its intellectual property.

While there is likely to be an implied license for the customer to use any intellectual property provided in the RFP response, if possible, it is prudent to specifically include license wording so it is clear what the restrictions on use are.

Also consider what intellectual property may be created by the customer in the future using information provided by the vendor. For example, could patents be created? If so, consider specific wording maintaining rights to any such patents.

Subject to Contract

While a vendor may not always be in a position to negotiate terms of the RFP response, the vendor could attempt to make the RFP response subject to a final contract, if one is reached between the parties. Again, the vendor could attempt to do this by adding a simple phrase “Subject to contract” in the footer of the RFP response. More detailed wording should also be considered in the main body expressly stating that the information provided is subject to contract.

If terms and conditions are attached to the RFP response, then wording should be added expressly objecting to such terms and conditions until a binding contract has been signed by the parties.

Sometimes RFPs will state that the vendor’s response will form part of the final contract. If this is the case, then the vendor will need to take special care in how its response is worded to ensure that it only contains details that it would be willing to form part of a binding contract. Consider a statement excluding the automatic incorporation of the RFP response into the proposed contract.

Accuracy of Information

RFP responses can be extremely detailed or can be more “high level”—and created in a hurry—in order to respond by the deadline. In any event, it is prudent to include wording to avoid the customer’s reliance on information contained in the RFP response. Issues of pre-contractual representations should be dealt with at negotiation and contracting stages.

No Waiver

Any acceptance of, or nonobjection to, positions stated in the RFP response should not be deemed to be a waiver by the vendor. The vendor should reserve its position until a contract has been signed.

Public Disclosure

Consider if there are any applicable laws that may permit or require public disclosure of the RFP response. While a vendor may not be able to avoid such disclosure, it may want to consider the level of information that is provided if the information could be subject to public disclosure.

Prejudicing the Vendor’s Position

While it is important to include all necessary legal protections, responses to RFPs can be a balancing act between achieving such protections and ensuring that the RFP response is compelling and commercially inviting for the customer.

The positions taken in the RFP response document will need to be considered in detail to ensure that the correct balance is achieved.